The U.S. economy grew at a 1.5% annual rate from April through June, a slower pace than the prior quarter as a jump in imports pulled down the headline number while households kept opening their wallets. The figure, released Thursday and reported by the Associated Press and Axios, compares with 2.1% growth from January to March and came in below economists’ expectations, Axios noted.
Consumers were the bright spot. Personal spending rose at a 3.2% annualized pace, a sharp pickup from the first quarter, according to both outlets. Business investment also stayed strong, advancing at an 8.4% rate. Axios linked much of that to ongoing spending on equipment and intellectual property that support artificial intelligence projects. Strip out the often-swingy pieces of the report—trade and inventories—and an underlying demand gauge rose at a robust 3.9% pace, Axios reported.
Trade told the other side of the story. According to the Associated Press, imports surged at an 11.5% rate, including shipments of computer chips and other items tied to AI buildouts. Because imports subtract from gross domestic product, AP said they shaved about 1.5 percentage points off second‑quarter growth. Axios similarly reported that trade knocked more than a full point off the top-line figure, with business inventories also weighing on growth.
Inflation, meanwhile, remains sticky even as some monthly relief showed up in June. The Commerce Department’s preferred price gauge—the personal consumption expenditures index—fell 0.1% from May, helped by lower energy costs, but was still 3.7% higher than a year earlier, Axios reported. Core prices, which exclude food and energy, were up 3.3% year over year, according to both outlets. The Associated Press emphasized that inflation remains above the Federal Reserve’s 2% goal and continues to frustrate many Americans.
Policy makers are holding their fire for now. Both AP and Axios reported that the Fed kept interest rates unchanged on Wednesday for a fifth straight meeting, though some officials dissented in favor of a hike. In remarks highlighted by Axios, Fed officials said the economy is showing resilience and pointed to strong business investment tied to AI.
The 1.5% reading undershot the roughly 1.8% growth economists expected, per Axios. Still, the mix of steady consumer demand and firmer business investment—with trade and inventories acting as the drag—offers a more nuanced picture than the headline growth rate alone. AP also noted that Americans’ frustration with prices is an ongoing theme as the election year approaches.
Why it matters
For families, the big takeaway is that prices are still rising faster than the Fed’s target, even if June brought a small monthly dip. That keeps pressure on budgets and suggests borrowing costs may stay higher for longer. For workers and savers, slower overall growth paired with steady spending implies the economy isn’t stalling, but it isn’t sprinting either. And in an election year, both parties are likely to lean on these numbers to make their case—so it helps to look past the headline and see what’s pushing and pulling under the hood.